Aviva plans further £400m in cost savings and efficiencies

British insurer Aviva today unveiled plans for a further £400 million in cost cuts over the next two years and said it was set for 'strong profitable growth' this year after sales for the first nine months rose in line with expectations.

The group has earmarked £200 million in efficiencies and £200 million in cost savings by the end of 2012, of which around half will come from the UK.

Some of the savings will be delivered thanks to Aviva's previously-announced decision to axe its 7,600 member final salary scheme in the UK next April and to axe several hundred jobs in its Canadian operations.

Cutting costs: Aviva has slashed its workforce by almost a fifth since 2007

But the firm is not planning large scale redundancies to achieve its
latest cost cutting measures, having already slashed its workforce by
almost a fifth since 2007.

Aviva also updated the market on third quarter performance, reporting a 26 per cent leap in UK sales to £2.4 billion.

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This took UK sales in the year so far to £12.3 billion, up 16 per
cent on a year earlier, while worldwide new business rose 5 per cent in
the first nine months of 2010.

'We are on track to deliver strong profitable growth and outstanding
capital generation for the full year 2010,' the company said in a
statement.

Total life and pensions sales for the nine months to September 30
were £25.5 billion, up 6 per cent compared with the same period last
year, and broadly in line with a consensus analyst forecast of £25.2
billion.

Worldwide long-term saving sales hit £8.4 billion in the third quarter, up 9 per cent on a year earlier.

But on a global basis, insurance sales dropped 11 per cent since the second quarter after a tougher market for its international operations, in particular Aviva's majority-owned Dutch insurer Delta Lloyd.

Shares rose nearly 2 per cent as investors cheered the third quarter update and news of further cost savings.
The figures showed a marked improvement on a year earlier, when the financial crisis left nine-month worldwide life and pension sales down by a worse-than-expected 11 per cent.

UK life and pension sales fell 25 per cent this time last year.
Aviva has been concentrating on profitable business and pulling out of less lucrative areas, as well as cutting costs to help offset more difficult markets.

However, the group has faced shareholder pressure after it spurned a £5 billion offer from MoreThan owner RSA for its general insurance arm.
But Aviva has ruled out a break-up, saying in August there were compelling strategic and financial benefits in continuing to run the general insurance business alongside its pensions and investments division.

It said this view was supported by a recent strategic review carried out in conjunction with external advisers and confirmed today it wants to expand general insurance business worldwide.